Average Investment Management Fees for the High Net Worth
Investment and portfolio management for high net worth individuals promises high returns as well as high risks. You can try to devise and execute your investments yourself, and you might even get lucky enough to make some profits. However, without the right research, analysis, market study and evaluation, you will always be at risk of losing large chunks of your investments to fees, expenses and losses; and this is why we’ve published a very in-depth book about investment management, estate, taxes, and financial costs specifically written for investors looking to invest between $5 million to $500 million. Request your free copy if you qualify for free here.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
That’s why it is worth it to just pay the average investment management fees and work with an expert financial advisor or investment management firm to handle your portfolio. High-net-worth investors worth $10 million or more can read about all the reasons why such an advisor is crucial for them from our eye-opening guide on the best financial advisors.
Alternatively, you can also consult Pillar Wealth Management for any investment-related concerns or otherwise. Our financial advisors and wealth managers have been working in the industry and catering to high-net-worth and ultra-high-net-worth clients specifically for more than six decades in total. Our immense experience and expertise allow us to understand our clients’ concerns and needs and develop personalized solutions accordingly.
In this blog, we’ll be looking at what investment management is, whether you really need it, and at what point you should get it. Let’s get started.
Table of Contents
What is Independent Investment Management?
Investment management is a financial service offered by various financial institutions. It involves the overseeing, consultation, selection, execution and overall management of all assets, portfolios and any other type of investments for an individual or family.
It is usually a long, complicated and arduous affair. Investment advisors have to constantly be watching the market for changing trends, hot buys, potential investment opportunities, etc. They have to keep an eye on local as well as international markets to predict future opportunities and capitalize on them in a timely manner.
They have to spend a lot of time analyzing different investment options, evaluate their performance, predict future performance, and then curate a strategic combination that best serves their clients’ needs. Other than that, they always have to stay up to date regarding a range of financial products and keep an eye on the day-to-day investment activities of their clients.
Often, this investment management is not enough on its own. These financial advisors have to worry about other things as well, such as the tax ramifications of their investment decisions and how they can protect their clients’ assets in case of any unforeseen events.
As affluent people can imagine, this is not something high or ultra-high-net-worth individuals can do on their own. They usually lack all the expertise and knowledge required to perform all these tasks efficiently. And even if they do have those skills, they usually lack the time as they are too busy building their empire.
If you find yourself facing similar problems, consider meeting with our expert advisors over at Pillar Wealth Management today to talk about it.
What Kind of Investments are Suitable for High-Net-Worth Individuals?
The biggest factor here is that high-net-worth individuals are simply not like the average American. They have entirely different needs and goals that require entirely different strategies and complex plans. Normal investment strategies don’t work for affluent individuals.
That’s why they need to pay the average investment management feesand partner with an investment advisor that can help them choose the right products and assets to invest in. What do these products look like? Well, it can be different for every affluent individual, but here are some investments that are suitable for ultra-high-net-worth individuals.
Stocks are a popular investment choice in most portfolios. Essentially, they signify that you are one of the shareholders of the company or corporation. You receive some returns either in the form of profits or dividends. While this type of investment offers the opportunity to earn extensive profits in the long run, stocks also carry a lot of risks as they are heavily influenced by the market forces and their volatility.
As compared to stocks, bonds are a somewhat safer choice. They carry fewer risks and are much more stable too. But this doesn’t mean they are entirely free from any risks. Moreover, they offer lower returns too sometimes. Bonds are basically an investment into a company or even a public institution that gives you back the money invested along with some interest.
In mutual funds, several investors pool together their money and use the collective amount to invest in various assets and securities. This allows them to create a diverse portfolio with minimal risk that every investor is able to benefit from. Mutual funds need to be managed by investment advisors and managers so that they can oversee the large amount of wealth and movement of funds.
Many investors tend to avoid investing too much in real estate as it is not a liquid asset. If you are ever in a financial, or otherwise, emergency and need cash right away, it will hard to get from your real estate investments. However, the truth is that real estate adds further diversity to your portfolio and helps you mitigate risk. Furthermore, it offers plenty of profits in the long run if the property value rises high enough.
Cash investments or even maintaining the right amount of cash in your portfolio is another tricky business. As mentioned earlier, real estate is a non-liquid asset that won’t come in any help when you’re in an emergency and need cash. That’s why you need cash investments. Such investments can give you some peace of mind as you will know that some cash is always available for any surprising situation.
It can help you execute your other investments effectively as you won’t need to sell them prematurely in case of an emergency. We suggest reading our exhaustive guide on portfolio performance to discover the intricacies involved in choosing the right investments for high-net-worth individuals. You can also directly set up a free meeting with our advisors to discuss your investment options.
Do You Need Investment Management?
Handing over or even confiding with someone regarding your $500 million worth of assets can feel daunting. That’s why you might be still hesitant to hire an investment management firm. However, as we’ve described earlier, investment management is not easy.
In fact, it is incredibly hard and a time-consuming task. That’s why it is best left to the professionals. Investment advisors will carry out all the necessary grunt work beforehand so that your portfolio consists of the best combination of assets for you.
With an investment management firm, it’s up to you how involved you want to be. You can stay out of it completely and simply let your advisor handle all your investments while you pursue your other hobbies and interests.
And if you want, you can be completely involved in it, discussing and analyzing your options with your advisor as they guide you about the best strategies. High-net-worth investors worth $10 million can find such advisors by reading our brilliant guide on choosing the right financial advisor.
Besides that, with investment management, you can also address other important concerns in your life, such as securing your retirement and accumulating enough wealth to pass on to your loved ones. Find out about other reasons why you need investment management from our enlightening book, The Art of Protecting Ultra-High-Net-Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.
At What Point Should You Meet Investment Management?
If you are a high-net-worth individual with $5 million to $500 million in liquid assets, you need to schedule a meeting with an investment management or wealth management firm right away. With such a financial position and background, it will be hard for you to execute investments efficiently and successfully, as mentioned earlier.
That’s why you need to meet with an expert investment advisor right away so that you can get started on your investment and portfolio management right away. You can set up an in-person meeting or virtual meeting, but the idea is to partner with an investment management firm right away so that you can make use of every single day to grow your assets.
Besides that, if you manage to find the right firm for yourself, you won’t need to worry about meeting them again. They will constantly be in touch to keep you updated about your portfolio performance and will keep you in the loop about future possibilities.
If your advisor doesn’t keep you updated or only contacts you when he wants to sell another security, it’s a dangerous sign. We suggest reading our excellent guide on finding the best financial advisors to learn about other such signs.
Average Investment Management Fees
Finally, another important factor high-net-worth individuals need to consider is the average investment management fees. With $5 million to $500 million in liquid assets, some of these affluent individuals might not be too concerned with this fee as long as they see positive results.
However, the truth is that the kind of fee you pay the investment management firm can impact the success of your investment plan later on. For instance, some advisors such as brokers work on a commission basis.
They will help you choose different products and assets to invest in, and every time you trade any of these products, they will earn a commission over it. It seems harmless, but the problem with commission-based advisors is that there is always a risk of conflicts of interest.
This doesn’t mean that they will advise you to put your money in bad investments. It simply means that they won’t be that committed to looking out for your best interests either. Among two assets, they could be tempted to recommend you one that earns them a better commission instead of one that is better for you and your personal goals.
So, before you actually worry about the average investment management fees, you should take into account what kind of compensation model the firm is following. Once you’ve made sure that they are not working on commission, and operate on a fee-only basis, then you should think about the average investment management fees.
Most investment management firms charge aaround 1% annually on the total assets under management, but if you aren’t watching your advisor carefully then your additional costs and expenses may very well be another 1%. However, the fees can also depend on factors like your precise net worth and the management style of your advisor. Learn more about why this matters from our exclusive guide on portfolio growth strategies.
When it comes to investment management, successful and efficient investment management, high-net-worth individuals and families are always left with many concerns and questions. Which kind of assets should they invest in? How can they develop a risk-free portfolio? What will be the average investment management fees? The answers to these questions are always different for everyone. The right asset allocation will look different for every affluent client, and a strategy that works for one wealthy individual may not necessarily work for the other.
That’s why they need to enlist the help of an experienced financial advisor, such as those at Pillar Wealth Management. Our independent and white-glove wealth management firm offers various investment management, asset allocation, portfolio diversification, risk management, and wealth management services. We have been working with high and ultra-high-net-worth clients specifically for more than thirty years now. Our advisors and managers understand the unique challenges these individuals go through and come up with appropriate solutions to help overcome them. Schedule a no-obligation discussion with Pillar Wealth Management today.
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